tag:blogger.com,1999:blog-4921988708619968880.post283807049089485112..comments2024-02-28T22:03:57.237-05:00Comments on The Automatic Earth: Debt Rattle, January 29 2008Ilargihttp://www.blogger.com/profile/09698428009501267664noreply@blogger.comBlogger23125tag:blogger.com,1999:blog-4921988708619968880.post-2928818492019516652008-01-30T14:49:00.000-05:002008-01-30T14:49:00.000-05:00GodrazI wouldn't know if the govt has a stomach fo...Godraz<BR/><BR/>I wouldn't know if the govt has a stomach for a new New Deal bubble, but how about a WWIII bubble, WWII seemed to work a treat for the last depression, but of course that was after things unwound. But then again, if we beat the unwinding by not waiting for spring but having it now, who knows where we could send the world economy, maybe to the moon along with large chunks of theAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-4921988708619968880.post-32922342349968033672008-01-30T13:14:00.000-05:002008-01-30T13:14:00.000-05:00While I agree that credit contraction, over valued...While I agree that credit contraction, over valued assets resetting, and writing off debts are all deflationary threats, and from the perspective of CB levers are hard to control, especially as public sentiment to spend sours. <BR/><BR/>Yet on the other hand I also do think that this outlook almost completely overlooks the abilities and propensity of governments dealing with such a scenario to godrazhttps://www.blogger.com/profile/15585439434600849499noreply@blogger.comtag:blogger.com,1999:blog-4921988708619968880.post-40486277736170618622008-01-30T12:38:00.000-05:002008-01-30T12:38:00.000-05:00In fact I'll go one step further. If the creditor...In fact I'll go one step further. If the creditors have given credit without sufficient collateral (say they were betting on growth), what they want is as few defaults as possible, but to live on the interest, even if they never get the full principle back. So if a mass of defaults looms, the creditors and debtors will both loose their shirts, so they can conspire to inflate prices (and wages).Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4921988708619968880.post-4471159200090073292008-01-30T12:10:00.000-05:002008-01-30T12:10:00.000-05:00Look if our homes only go back to 1995 prices then...Look if our homes only go back to 1995 prices then we will have a normal deflation and Ilargi will be right. But 750 Trillion$, thats what the world's GDP for 25 years? Thats insane. And that's just derivatives. The notional money supply has no relation whatsoever to underlying wealth. More than enough money for hyperinflation in consumer-goods prices has already been electronically created.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4921988708619968880.post-56207213529793463872008-01-30T01:52:00.000-05:002008-01-30T01:52:00.000-05:00Trillions of dollars will disappear as if they nev...<I>Trillions of dollars will disappear as if they never existed, they were not based on any real underlying asset. It was all only leverage, all the time. Since no central bank can print $10 or $100 trillion, deflation is the only possible outcome.</I><BR/><BR/>Why would they need to 'print' $$, when most exchange these days is in digi-dollars? Is it these digi-dollars that 'will disappear'?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4921988708619968880.post-63084076130004865282008-01-30T00:14:00.000-05:002008-01-30T00:14:00.000-05:00I'm still confused re: inflation and deflation. It...I'm still confused re: inflation and deflation. It seems too easy for a gov't to inflate its currency to me. Money is borrowed into existence, and the biggest debtor (the gov't) is potentially able to borrow near-infinite amounts. The tax rebate is an example of this. I realize that housing prices are driving the economy in a deflationary direction tho. <BR/> <BR/>I guess it really doesn't matterAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-4921988708619968880.post-52515744130633731922008-01-29T19:58:00.000-05:002008-01-29T19:58:00.000-05:00One More Thing.From -http://globaleconomicanalysis...One More Thing.<BR/>From -<BR/>http://globaleconomicanalysis.blogspot.com/2008/01/bank-reserves-go-negative.html<BR/><BR/><B>Bank Reserves Go Negative</B><BR/><BR/>"Given that the Fed is not in a credit tightening mode, we must look for a better explanation. Here it is: Banks in aggregate have now burnt through all of their capital and are forced to borrow reserves from the Fed in order to keep NoelPhttps://www.blogger.com/profile/15669916200331381175noreply@blogger.comtag:blogger.com,1999:blog-4921988708619968880.post-76870520120430108582008-01-29T19:20:00.000-05:002008-01-29T19:20:00.000-05:00Brian M,Resets can happen at various scales, and t...Brian M,<BR/><BR/>Resets can happen at various scales, and the severity of the hangover is generally proportional to the scale of the party that preceded it. I think what's coming is a reset on a very large scale, like the 1930s only worse. We've seen a derivatives market go from nothing to a notional value of about $750 trillion in about 25 years - now that's a credit expansion!<BR/><BR/>You're Stoneleighhttps://www.blogger.com/profile/15099878430757036461noreply@blogger.comtag:blogger.com,1999:blog-4921988708619968880.post-65746806458259497452008-01-29T18:48:00.000-05:002008-01-29T18:48:00.000-05:00OuttaControl:My goal is to buy a piece of land in ...OuttaControl:<BR/><BR/><I>My goal is to buy a piece of land in a suitable community and stop thinking about money all the time!!</I><BR/><BR/>I happen to know of such a community.Ilargihttps://www.blogger.com/profile/09698428009501267664noreply@blogger.comtag:blogger.com,1999:blog-4921988708619968880.post-66044508355848358802008-01-29T18:45:00.000-05:002008-01-29T18:45:00.000-05:00BrianM,To get hyperinflation, you need a hyper inc...BrianM,<BR/><BR/>To get hyperinflation, you need a hyper increase in money supply. Someone printed those million mark bills in Weimar. Where would you see that coming from today? <BR/><BR/>What I see is the opposite coming up: a hyper decrease in money/credit/debt supply, from the values of real assets like homes, spiraling all up and down the Ponzi pyramid into the derivative instruments that Ilargihttps://www.blogger.com/profile/09698428009501267664noreply@blogger.comtag:blogger.com,1999:blog-4921988708619968880.post-42877178252449978872008-01-29T17:20:00.000-05:002008-01-29T17:20:00.000-05:00Even though the law states that bank depositors ar...Even though the law states that bank depositors are not first in line when the FDIC steps in to bail out a failed bank, I cannot imagine what financial mayhem would ensue if word got out that an FDIC-insured account was not made whole. I have to think the money would be found SOMEHOW, just to avoid social meltdown. But maybe even the gov't has lines it cannot cross - that's the part I'm having Anonymoushttps://www.blogger.com/profile/09173962100018470354noreply@blogger.comtag:blogger.com,1999:blog-4921988708619968880.post-34644812661293758112008-01-29T17:08:00.000-05:002008-01-29T17:08:00.000-05:00Look this money/credit cycle spin certain seems ri...Look this money/credit cycle spin certain seems right in its main points, but it seems to only be talking about minor resets that don't cut very deep. <BR/><BR/>It claims "Creditors will end up with all the assets that are pledged on debts that default. Debtors will end up broke." But if things are mildly bad, the assets aren't enough to cover the debts, and the creditors have to fight among Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4921988708619968880.post-59793514902854574432008-01-29T16:50:00.000-05:002008-01-29T16:50:00.000-05:00noelpI can't answer your question but have wondere...noelp<BR/><BR/>I can't answer your question but have wondered about that myself since reading about the FDIC issue. My fears go a step beyond the insurance issue and more toward the delay and inconvenience if ever a major bank in Canada became suspect. I believe that, just like Britons standing outside Northern Rock branches, we too would queue for the bank run. Who knows how long it would Farmerodhttps://www.blogger.com/profile/03492165772535123915noreply@blogger.comtag:blogger.com,1999:blog-4921988708619968880.post-35511569053605858132008-01-29T16:06:00.000-05:002008-01-29T16:06:00.000-05:00Brian M,Check out this Market Ticker article for a...Brian M,<BR/><BR/>Check out this Market Ticker article for a clear explanation of the money/credit cycle and why deflation is inevitable:<BR/><BR/><A HREF="http://market-ticker.denninger.net/2007/12/moneycredit-cycle.html" REL="nofollow">The Money/Credit Cycle</A>Stoneleighhttps://www.blogger.com/profile/15099878430757036461noreply@blogger.comtag:blogger.com,1999:blog-4921988708619968880.post-55053854243040175222008-01-29T16:04:00.000-05:002008-01-29T16:04:00.000-05:00The FDIC itself says this:These rights, she added,...The FDIC itself says this:<BR/><BR/><I>These rights, she added, including prepayment fees, are provided by statute and are superior to the rights of depositors and even to the FDIC after an institution fails.</I><BR/><BR/>Chee! that one is as good as Catch 22, any thoughts where more of these Bouncing Betty land mine insurance policy catches will spring out of? ... particularly in Canada?<BR/><BRAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-4921988708619968880.post-52625893235405337962008-01-29T15:38:00.000-05:002008-01-29T15:38:00.000-05:00I live in Canada is our deposit insurance any bett...I live in Canada is our deposit insurance any better / safer ?NoelPhttps://www.blogger.com/profile/15669916200331381175noreply@blogger.comtag:blogger.com,1999:blog-4921988708619968880.post-86812499352212949352008-01-29T15:14:00.000-05:002008-01-29T15:14:00.000-05:00I only partially understand these things, but I do...I only partially understand these things, but I don't really understand why Ilargi is so confident that we'll get deflation rather than hyper-inflation.<BR/><BR/>Surely lots of the money supply is going to be written off as bad debt over the next few years which will have a powerful deflationary effects. Surely lots of entities will try to counter-balance this, with whatever economic levers theyAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-4921988708619968880.post-10280229313143120322008-01-29T13:03:00.000-05:002008-01-29T13:03:00.000-05:00regarding SocGen: href="http://www.bloomberg.com/a...regarding SocGen:<BR/><BR/><A> href="http://www.bloomberg.com/apps/news?pid=20601087&sid=adZzlkrK102k&refer=home">Societe Generale Board Member Sold Shares on Jan. 18 </A>Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4921988708619968880.post-2868461774540020232008-01-29T13:02:00.000-05:002008-01-29T13:02:00.000-05:00just to have a balanced view on the in/deflation i...just to have a balanced view on the in/deflation issue, Henry CK Liu's latest:<BR/>http://www.atimes.com/atimes/Global_Economy/JA30Dj02.htmlAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-4921988708619968880.post-51627364435932167282008-01-29T12:37:00.000-05:002008-01-29T12:37:00.000-05:00The previous comment was my first.Will be commenti...The previous comment was my first.<BR/><BR/>Will be commenting more soon. I forward your site to my email list getting them to visit too.<BR/><BR/>SamsaraAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-4921988708619968880.post-16598321092651714362008-01-29T12:35:00.000-05:002008-01-29T12:35:00.000-05:00Great post, Great site. I visit everyday.Great post, Great site. I visit everyday.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4921988708619968880.post-83842438049121869752008-01-29T12:24:00.000-05:002008-01-29T12:24:00.000-05:00Sorry, fromthepriesthole it looked kinda funny, bu...Sorry, fromthepriesthole <BR/><BR/>it looked kinda funny, but far too confusing, this is better:<BR/><BR/>-------------<BR/><BR/>fromthepriesthole said...<BR/><BR/> Excellent<BR/><BR/><BR/>The shoes just kept dropping! Excellent post<BR/>-------------Ilargihttps://www.blogger.com/profile/09698428009501267664noreply@blogger.comtag:blogger.com,1999:blog-4921988708619968880.post-5365159431490903842008-01-29T12:00:00.000-05:002008-01-29T12:00:00.000-05:00This comment has been removed by a blog administrator.Anonymousnoreply@blogger.com